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Roper (ROP) Q2 Earnings Beat, Application Software Sales Up Y/Y
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Roper Technologies’ (ROP - Free Report) second-quarter 2024 adjusted earnings of $4.48 per share surpassed the Zacks Consensus Estimate of $4.46. On a year-over-year basis, earnings increased 9%.
Roper’s net revenues of $1,716.8 million missed the consensus estimate of $1,724 million. However, the top line increased 12% year over year. Organic revenues increased 4%, driven primarily by solid momentum in the company’s Application Software segment. Acquisitions boosted sales by 8%.
Segmental Performance
The company reports under three segments, namely Application Software, Network Software and Technology Enabled Products.
Application Software’s revenues totaled $931.8 million, representing 54.3% of the quarter’s top line. Our estimate for the quarter was $917.4 million. On a year-over-year basis, the segment’s revenues increased 21%. Organic revenues increased 5%. The growing adoption of SaaS solutions and continued GenAI innovation were key catalysts to the segment’s growth. Solid demand for SaaS solutions within the Deltek business in the private sector and strong customer retention in the Vertafore business also augmented the segment’s performance.
Network Software & Systems generated revenues of $364.2 million, accounting for 21.2% of second-quarter revenues. Our estimate for the quarter was $372.4 million. Segmental revenues grew 2% year over year. Organic revenues increased 2%. Strength in iPipeline and ConstructConnect businesses supported the segment’s performance.
The Technology Enabled Products segment generated revenues of $420.8 million, accounting for 24.5% of the quarter’s revenues. Our estimate for the quarter was $434 million. Sales were up 4% year over year. Organic revenues grew 5%. The strong performance of the Verathon and Neptune businesses drove the segment’s top-line performance.
Roper Technologies, Inc. Price, Consensus and EPS Surprise
In the reported quarter, Roper’s cost of sales increased 12.8% year over year to $523.5 million. Gross profit increased 11.8% to about $1.19 billion, while the gross margin decreased to 69.5% from 69.7% in the year-ago quarter.
Selling, general and administrative expenses increased 10.7% year over year to $699.1 million. Adjusted EBITDA was $695 million, reflecting year-over-year growth of 13%. The margin increased 20 basis points to 40.5%. Interest expenses (net) increased 94% year over year to $67.5 million.
Balance Sheet & Cash Flow
Exiting the second quarter, Roper had cash and cash equivalents of $251.5 million compared with $214.3 million at the end of December 2023. Long-term debt (net of current portion) was $6.9 billion compared with $5.8 million at the end of 2023.
Roper generated net cash of $915.6 million from operating activities in the first six months of 2024, reflecting an increase of 16.6% from the year-ago level. Capital expenditure totaled $15.9 million compared with $24.9 million in the year-ago period.
In the first six months of 2024, ROP rewarded its shareholders with a dividend payment of $160.6 million, up 10.9% year over year.
Outlook
For 2024, Roper expects adjusted earnings per share from continuing operations to be in the range of $18.10-$18.25 compared with $18.05-$18.25 stated earlier. Total revenues are expected to increase 12% as guided earlier. Organic revenues are anticipated to increase 6% in 2024 from the year-ago reported number.
For the third quarter, Roper anticipates adjusted earnings to be $4.50-$4.54 per share, higher than $4.42-$4.46 projected previously.
Zacks Rank & Stocks to Consider
ROP currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the same space are discussed below:
The Zacks Consensus Estimate for NTNX’s fiscal 2024 (ending July 2024) earnings has increased 16.2% in the past 60 days.
Vertiv Holdings Co (VRT - Free Report) currently carries a Zacks Rank of 2. VRT delivered a trailing four-quarter average earnings surprise of 24.2%.
In the past 60 days, the Zacks Consensus Estimate for Vertiv’s 2024 earnings has increased 0.8%.
CyberArk Software Ltd. (CYBR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 112.1%.
In the past 60 days, the Zacks Consensus Estimate for CYBR’s 2024 earnings has remained stable.
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Roper (ROP) Q2 Earnings Beat, Application Software Sales Up Y/Y
Roper Technologies’ (ROP - Free Report) second-quarter 2024 adjusted earnings of $4.48 per share surpassed the Zacks Consensus Estimate of $4.46. On a year-over-year basis, earnings increased 9%.
Roper’s net revenues of $1,716.8 million missed the consensus estimate of $1,724 million. However, the top line increased 12% year over year. Organic revenues increased 4%, driven primarily by solid momentum in the company’s Application Software segment. Acquisitions boosted sales by 8%.
Segmental Performance
The company reports under three segments, namely Application Software, Network Software and Technology Enabled Products.
Application Software’s revenues totaled $931.8 million, representing 54.3% of the quarter’s top line. Our estimate for the quarter was $917.4 million. On a year-over-year basis, the segment’s revenues increased 21%. Organic revenues increased 5%. The growing adoption of SaaS solutions and continued GenAI innovation were key catalysts to the segment’s growth. Solid demand for SaaS solutions within the Deltek business in the private sector and strong customer retention in the Vertafore business also augmented the segment’s performance.
Network Software & Systems generated revenues of $364.2 million, accounting for 21.2% of second-quarter revenues. Our estimate for the quarter was $372.4 million. Segmental revenues grew 2% year over year. Organic revenues increased 2%. Strength in iPipeline and ConstructConnect businesses supported the segment’s performance.
The Technology Enabled Products segment generated revenues of $420.8 million, accounting for 24.5% of the quarter’s revenues. Our estimate for the quarter was $434 million. Sales were up 4% year over year. Organic revenues grew 5%. The strong performance of the Verathon and Neptune businesses drove the segment’s top-line performance.
Roper Technologies, Inc. Price, Consensus and EPS Surprise
Roper Technologies, Inc. price-consensus-eps-surprise-chart | Roper Technologies, Inc. Quote
Margin Profile
In the reported quarter, Roper’s cost of sales increased 12.8% year over year to $523.5 million. Gross profit increased 11.8% to about $1.19 billion, while the gross margin decreased to 69.5% from 69.7% in the year-ago quarter.
Selling, general and administrative expenses increased 10.7% year over year to $699.1 million. Adjusted EBITDA was $695 million, reflecting year-over-year growth of 13%. The margin increased 20 basis points to 40.5%. Interest expenses (net) increased 94% year over year to $67.5 million.
Balance Sheet & Cash Flow
Exiting the second quarter, Roper had cash and cash equivalents of $251.5 million compared with $214.3 million at the end of December 2023. Long-term debt (net of current portion) was $6.9 billion compared with $5.8 million at the end of 2023.
Roper generated net cash of $915.6 million from operating activities in the first six months of 2024, reflecting an increase of 16.6% from the year-ago level. Capital expenditure totaled $15.9 million compared with $24.9 million in the year-ago period.
In the first six months of 2024, ROP rewarded its shareholders with a dividend payment of $160.6 million, up 10.9% year over year.
Outlook
For 2024, Roper expects adjusted earnings per share from continuing operations to be in the range of $18.10-$18.25 compared with $18.05-$18.25 stated earlier. Total revenues are expected to increase 12% as guided earlier. Organic revenues are anticipated to increase 6% in 2024 from the year-ago reported number.
For the third quarter, Roper anticipates adjusted earnings to be $4.50-$4.54 per share, higher than $4.42-$4.46 projected previously.
Zacks Rank & Stocks to Consider
ROP currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the same space are discussed below:
Nutanix, Inc. (NTNX - Free Report) presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 63.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for NTNX’s fiscal 2024 (ending July 2024) earnings has increased 16.2% in the past 60 days.
Vertiv Holdings Co (VRT - Free Report) currently carries a Zacks Rank of 2. VRT delivered a trailing four-quarter average earnings surprise of 24.2%.
In the past 60 days, the Zacks Consensus Estimate for Vertiv’s 2024 earnings has increased 0.8%.
CyberArk Software Ltd. (CYBR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 112.1%.
In the past 60 days, the Zacks Consensus Estimate for CYBR’s 2024 earnings has remained stable.